80/20 Rule: Rule the School of Time Management
Since most of us spend a great deal of time management at work, it is critical to apply 80/20 to your workday. If you are not familiar with this rule, it’s simple and based on research by an Italian economist named Pareto. Pareto discovered that in his garden, about 20% of his peapod plants accounted for 80% of his harvestable crop. He applied this theory to business and it rang just a true, we achieve 80% of the results in our lives from 20% of the efforts.
Where are you focusing your efforts? Are you attacking the areas where you get the most bang for your buck? Or are you focused on the easy tasks that keep you busy and employed, but not substantial enough to make any waves?
If you are a numbers person, it means that 80% of the results in your life currently come from 20% of your efforts. As Pareto and other researchers have demonstrated with his research this principle holds true in virtually every cause/effect situation. What is even more eye-opening is that in many situations and examples, the ratio can get to even 99/1!.
At the end of the day, it really doesn’t matter what specific ratio you apply, the important thing to internalize is that in your life there are activities you do (the 20 percent) that equate for the majority (the 80 percent) of your outcomes (either successful or unsuccessful).
You probably aren’t surprised when I say that 20 percent of all of your income-producing actions produce 80 percent of your financial rewards, and you won’t be surprised that is, in fact, true, there are only a small sampling of activities that we all perform week to week that translates into income. We can also apply the 80/20 Principal to almost every aspect of our business or day to day working hours, and even though these are important things to keep in mind (my bank doesn’t take smiles and rainbows as payment) I earnestly feel that we should all be focusing on our overall happiness and fulfillment.
These are usually ignored even though they are much more important things to focus on in the grander scheme of things. Even though we all want to find out for ourselves whether money buys happiness, it absolutely plays an integral role in our lives and even it is heavily weighted by 80/20 activities, but always remember that it is merely a tool, a device that can assist in improving general well-being, which should always be your focused concern.
There are a lot of real-world examples that can help illustrate and drive home this principle, for an example we hear about in election years, in particular, the relative distribution of America’s wealth, usually quoted as 3% of the American population has control of the largest share of the assets.
This is a very concise and easily measured model for the 80/20 Principle. In addition, we can see examples in corporations where 20 percent of employees are responsible for 80% of a company’s output or the most common and referenced example by sales gurus: 20% of customers are responsible for 80 percent of the gross revenues.
Of course, these rules are not hard and fast, and likewise we understand that not all companies will follow this model necessarily and yes the ratio may not be quite exactly 80/20, but strong chances are likely that if you were to analyze and look at many of the key business metrics in most companies there is absolutely the presence of the minority supporting and facilitating the majority.
At a personal level, simply taking some time to step back and look at your daily habits you will surely find ample instances where 80/20 applies. For example daily phone calls (do you call everyone in your contacts list that often?). Think about this, out of all your friends on Facebook or in ‘real-life’, I am willing to bet you spend 80% of your ‘friend time’ with just a few of them.
Time management at work
Since most of us spend a great deal of time management at work, it is critical to apply 80/20 to your workday. If you perform some analysis of your daily work activities, it should pop out which small group of customers account for most of the revenues/actions or to do’s. On the flip side, it’s easy to also track the customers you spend the most time.
When you have both of these data points, simply look to see which customers you spend the least amount of time with but generate the most revenue and vice versa. The logical play is to cut the time drainers and focus on the profitable customers. Remember, your goal is to focus on those that add up to provide 80 percent of the value.
Other business metrics come into play as well, and finding your 80/20 is crucial. Let’s take a look through a business lens, where locating the core 80/20 ratios is critical for achieving peak performance. Your mission is to identify the products and/or services that earn the top echelon of your business income (this is the 20 percent) and you need to commit to making the tough decision to eliminate the remaining (this is the 80 percent) which only produce the marginal revenue and benefits. Discipline yourself to spend your productive time keying in on the parts of your business where you can improve with significance, utilizing your best core skills, and delegate all of the activities that are out of your wheelhouse to your best people. Do your best and work the hardest on the activities that will work the hardest for you and give you the best returns.